A country's economic strength is dependent on the spending habits of its citizens. The ability to purchase items is an American pastime and a lifestyle that is part of the American culture. Making wise spending decisions is essential to a citizen's ability to take care of the basic needs of his or her family even when the economy declines. Many people have irrational spending habits which may unavoidably lead to an individual's need for a payout, and collectively lead to the decline of a country's economy and the need for a bailout of businesses. Some individuals who may not have the financial ability to make purchases (due to lack of earned income and cash on hand, for example) do not slow down spending if credit is available. For many individuals, available credit is easy to obtain, but the lack of self control combined with serious purchasing power may become a problem when it is time to pay off debt. The more an individual has access to obtain credit, the more likely he is to generate debt. Debt by credit is compounded by high interest increasing the original debt incurred making it more difficult to pay off such debt.
Unwise spending habits practiced by an individual while he or she is employed do not easily convert to wise spending habits when unemployment is sudden and the job market is fragile. Individuals view wise and unwise spending differently. Some individuals find it difficult even when they are unemployed to differentiate their needs from their wants.
With various means of purchasing power, it can become difficult for an individual to distinguish between wise and unwise spending. This transition becomes even more difficult to make when many individuals purchase name brand items instead of generic items. Generic items often are more likely to provide for the essential needs of families, and, in some instances, provide the same effect as name brand at less cost. This desire to purchase name brand may take on the form of “keeping-up-with the-Jones” cliché.
The desire for individuals to spend is driven by businesses that constantly push their products and services in a competitive free market. Sellers constantly market products as new and improved, efficient and more user friendly, modernized and environmentally safe, durable and long lasting. With such catch-phrases, it can become difficult for consumers to ignore products that are incessantly publicized. Businesses advertise their products and services in the traditional form of billboards, television and radio announcements, and magazines and newspapers. In addition, computer technology, smart phones, I-Pods, online advertising, Kiosk and other aggressive marketing techniques on the cutting edge inundate consumers with product awareness. As a result, the yearning to buy can be difficult to bring to an end.
The desire to spend can be never-ending when an individual is employed. However, when that same individual becomes unemployed, the ability to distinguish between wise and unwise spending can be difficult. Unwise spending is an indicator that a person is unable or unwilling to differentiate between his needs or wants, and more than likely leads to financial hardship. Likewise, the ability to save becomes secondary at best. When an individual or family transitions from employment to unemployment in a distressed economy, their need to spend for items related to family, housing, health, transportation, investment, and entertainment still exists but it is imperative that such an individual or family practice wise spending habits.
Unless pricing is extreme, environment and location play the primary roles in how individuals select which items to purchase. Buying comfort items is a double-edged sword embedded in the mindset of the American dream, and is a difficult habit to break. The fact that consumers must transition from purchasing items of wants to items of necessity may be seen as a blemish on the American dream. Even when unemployment is high, and employment at a low, limiting the desire to spend to only basic needs such as food, shelter, and clothing, is difficult.